Technical bids from prequalified bidders are due on 16 November for the long-awaited build-own-operate (BOO) contract to develop a 130-MW solar/gas hybrid power plant at Hassi R'Mel, 60 kilometres northwest of Ghardaia (MEED 1:10:04).

The construction of the facility will be carried out on an engineering, procurement and construction (EPC) basis, calling for the installation of an 80-MW gas turbine, a 75-MW steam turbine and a 25-MW solar element composed of 180,000 square metres of parabolic mirrors.

The successful bidder will be required to take a 51 per cent interest in the project's capital, with the client, renewable energy agency New Energy Algeria (NEAL), and Banque Exterieure d'Algerie (BEA)taking a combined 34 per cent stake and the European Investment Bank (EIB) holding 15 per cent.

NEAL is in negotiations with a number of organisations about the contract's financing. A Eur 50 million ($60 million) grant has been offered by Germany, with the US Department of Energy and a number of green funds also understood to be interested in providing capital.

Twelve companies submitted expressions of interest in June 2004, but doubts persist about the viability of the contract. 'We are uncertain whether we will submit an offer,' says one of the prequalified bidders. 'We are not sure about our partnering arrangements for the solar element, and the requirement to take an equity stake is also a concern.'

'The issue is the solar component,' said another source close to the project. 'It is a very good project, and funding can easily be secured from the numerous green funds, but a developer or EPC contractor would find the project difficult because of the high level of at-risk capital during the development phase. Those companies with solar expertise don't have the right balance sheet or experience to deal with this type of project. It would be better for Algiers to do the development, put out a tender for the EPC, and bring in a strategic investor after a couple of years. Investors have lots of opportunities at the moment, so they may be reluctant to stick their neck out with a relatively new technology.'

NEAL was established in July 2002 and is jointly owned by state energy company Sonatrach, with 45 per cent, state power company Sonelgaz, also with 45 per cent, and Semouleries Industrielles de la Mitidja (SIM)with 10 per cent.